Help me battle my teacher's indoctrination

[bdk3clash]

Oh, just get a hold of David Horowitz alrady.

[Felix_Nietzsche]

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He consistently refers to Enron and the sub prime housing collapse as failures of the "unregulated free market".

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Nonsense... Bad businesses going bankrupt is a CRITICAL part of the free market. No business is guaranteed success. The strong survive and the weak businesses die. In a free market it is important that some businesses die. With the govt, currupt and competant programs survive no matter how bad they are...

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Then he speaks of the sub-prime lenders and how they screwed over people (he also mentioned how lenders would help people set up fake jobs to get approved for the loans).

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I call bull**** on this.
A morgage salesman might commit fraud to get his commission but the owners of the business would NEVER knowingly allow this. Where loan money to people who can't pay it back?

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He has also asserted that with the government managing social security there is a 1% cost of handling the money, yet if it was done privately there would be a 20-30% fee.

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A complete LIE. 1% ????
This man is not sane. If I had my SS money and invested myself I would do MUCH-MUCH better.

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Like many advocating massive social programs he mentions the Scandinavian countries such as Norway and Sweden as essentially Utopian societies which we should model our social programs.

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These nations do better than most socialist countries. They are the exception rather than the rule...

Just regurgitate his nonsense back on a test to get a good grade then NEVER take another class from him again...

[AlexM]

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The OP has very little shot at getting the professor fired: if a professor is teaching a Poli Sci class, he may give his opinions on Poli Sci.

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If he teaches his opinions as reality instead of as his opinions and fails to provide other opinions, he should be fired. Seriously, reporters strive to be biased and fail, but the need for impartiality in a reporter is absolutely nothing compared to the need for it in a political science teacher. Of any job anywhere, these are the people who should have the most neutrality! (or at least be capable of showing other points of view)

[AlexM]

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For years I've argued that the school of business should stop it's capitalist propagandizing, but no one listens. They do not even accept the principle that they should consider the socialist viewpoint.

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You think this is remotely comparable? Business school is basically "capitalism school." Of course it's going to be biased! I'm fairly certain that this is the worst post you've ever made that I've seen.

[Copernicus]

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jumping off point

http://www.coyoteblog.com/coyote_blo..._security.html

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In fact, the implied rate of return on my money in the Social Security system is -0.8% a year. In other words, not only is the government not paying me any interest, they are charging me to hold my money.

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Also note that the analysis is all in nominal dollars, because that is the way the dollars are on my SS statement - there are not inflation escalators in the program.

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Thats what happens if you let a non-actuary play with numbers.

If you d/l his spreadsheet you'll see that at 5% return on his and the employer contributions, he projects (including constant future salary) a total of $1.077 million including interest to his retirement age.

He also states that gives him a benefit of $7,789 a month. Assuming no inflation at all post retirement, the value of that is 7789*12*10.82 (the annuity factor at 5% interest, o inflation) = $1,011 million, so on that very conservative basis he loses a little at 5%.

However, reality is that the benefit will be paid with Cost of living adjustments, even if his salary doesnt grow. That increases the value to $1.284 million.

And that only takes into account his own benefit. If he is married and has a nonworking spouse, the benefit doubles and the value doubles to nearly $2.5 million. If his spouse worked and contributed to SS, the benefit is based on the higher wage earner, still $2.5 million. So say she earned 80% of what he did, then the value of their combined contributions totals $1.94 million, still significantly better than 5% ROR.

What about his claim of using "nominal dollars"? Well, he cant have his cake and eat it to. Rates of return on investments include an inflation premium. If there were no inflation, you couldnt earn 5%+ on your money. So if he wants to carve inflation out of the value of the Social Security investment, he has to use compare it to an inflation free rate of return. (Or he has to recognize that the buying power of his "self-saved" dollars is subject to the same inflation as the monthly benefit he's getting from SS).

It is much easier to look at someone retiring today, because it takes the future earnings and pre-retirement inflation issues out of the equation.

A worker earning $50,000 last year, which grew at 3% a year since he started working has an ROR of 5.4% if hes single, 7.8% with a non-working spouse, and somewhere in between with a working spouse earning less than he did.

His calculations also ignore childrens benefits (small value since not many collect SS with children of eligible age), and disability benefits, which does increase the value by a few percent.

Another fault in his analysis is taxation of the employer portion of the contribution. The employer is indifferent whether he pays it to the employee or the SSA, he gets the same deduction from taxed profits either way. However, if he pays it to the employee, the employee will be taxed on it. So in his calculation he overstates what he actually could have "saved" without Social Security by whatever his marginal tax rate is.

Another assumption in his calculation that isnt made clear is that he is assuming all of his contributions could have been invested in a tax free manner, since he's accumulating the contributions with full, not taxed interest.

His calculation is very typical of the lay calculations that even make their way on to legislators' desks, and they don't nearly present reality.

[PLOlover]

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He also states that gives him a benefit of $7,789 a month.

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that's if SS were privatized, basically? how much he get from SS?

[PLOlover]

also cato or whatever said a similiar thing, with all the mumbojumbo, at least for low incomeers.

[PLOlover]

whats the max monthly for SS?

[Richard Tanner]

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The OP has very little shot at getting the professor fired: if a professor is teaching a Poli Sci class, he may give his opinions on Poli Sci.

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If he teaches his opinions as reality instead of as his opinions and fails to provide other opinions, he should be fired. Seriously, reporters strive to be biased and fail, but the need for impartiality in a reporter is absolutely nothing compared to the need for it in a political science teacher. Of any job anywhere, these are the people who should have the most neutrality! (or at least be capable of showing other points of view)

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Political science is one of the more fluid behavioral sciences, there are very few "right" answers so impartiality is going to be hard to come by.

By the way, others have said it but he's right on Enron, it's a failure in the market, but that happens. Nothing is perfect.

Cody

[Copernicus]

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He also states that gives him a benefit of $7,789 a month.

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that's if SS were privatized, basically? how much he get from SS?

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sorry, I misread what he said. He claims that he would only get $1,985 a month in SS benefits, however thats an anomaly caused by his misuse of "nominal dollars" for the future, but inflated dollars in the past. If you use the SS full projection estimator the monthly benefit assuming his pay grows at 3 and inflation is 2.5%, then his monthly SS benefit is about 4500 single, 9000 with spouse.

That will lower his ROR closer to the risk free rate of return. Note though that he had many years of earning at the maximum tax level. That hurts your ROR, since, as discussed earlier, there is a wealth transfer effect built into the benefit formula...high wage earners are subsidizing the "ROR" of lower wage earners.